Question

1. Suppose you borrowed $10,000 for 4 years with quarterly payments at an APR of 7%.

Please show all work and formulas used!!

1. What is the Quarterly payment?
2. Amortize the first four payments .Set up a table like the one below:

Payment Number                    Payment              Interest                Principle               Remaining Balance

               

1                                              ________           ________           ________           _______________

2                                              ________           ________           ________           _______________

3                                              ________           ________           ________           _______________

4                                              ________           ________           ________           _______________

3. How much interest will you pay over the life of the loan?

Answer 1

a)		if payments are made quarterly
		P =	Regular Payments
		PV =	Loan Amount
		r =	rate of interest
		n =	no of periods
		P =	r (PV)
			1 - (1 + r )-n
		P =	(7%/4)*10000
			1 - (1 / (1 + 7%/4)^16))
		P =	175
			0.242383693
		P =	722.00
		Quarterly payment = $ 722
b)	Payment NO	Payment	Interest	Principal	Remaining Balance
	1	722	$175.00	$547.00	$9,453.00
	2	722	$165.43	$556.57	$8,896.44
	3	722	$155.69	$566.31	$8,330.13
	4	722	$145.78	$576.22	$7,753.91
C)		Overall Interest =	Overall Emi - Loan amount
			(722 * 16) - 10000
			$1552